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The Banco de Portugal has attempted to enhance payment transparency and security by introducing new rules to identify final beneficiaries in transactions using payment references and direct debits.
In a bid to combat fraud and opacity, payment service providers (PSPs) operating in Portugal will now need to ensure payers can access the identity of the final beneficiary of a transaction, as well as the identity of the beneficiary's PSP.
“As a result of the increasing complexity of payment service provision models, the Bank of Portugal has found that there are difficulties in clearly identifying the final beneficiaries of the funds,” said the country’s consumer bureau in a press statement.
It added that this “has increased the practice of fraud and swindling crimes through the use of these payment services, causing, in certain cases, significant financial damage to the originators of the transactions”.
The new rules apply to payments executed with references and direct debits, focusing on transactions involving accounts domiciled in Portugal, and follow a public consultation earlier this year.
Consultation responses
Respondents to the central bank’s consultation identified a variety of issues, with the payment institution EasyPay raising concerns about PSPs’ failure to transmit beneficiary information included in transaction charges.
The fintech argued that PSPs must be required to share such details, as mandated under PSD2 regulations, and suggested the notice hold national processors like SIBS accountable for ensuring this data is passed on to payers.
EasyPay emphasised the need for standardised procedures to prevent discretionary practices by larger operators that could disadvantage smaller market players, and warned that inconsistent communication processes could spout inefficiencies and inaccessibility in the payment system.
Mediterranean banking giant BBVA, meanwhile, argued that including both the identity of the final beneficiary and the PSP in payment statements could confuse payers, and recommended limiting the information to the identity of the final beneficiary, as this is the entity with which the payer recognises a commercial relationship.
BBVA proposed an amendment to ensure beneficiary details are provided before the transaction initiation and included in account movement statements to simplify the user experience.
In addition, credit reporting agency Equifax sought clarification on the terminology used in the notice, particularly regarding “payment operations based on a card executed using payment reference”.
It suggested rephrasing it to specify “payment operations based on a digital channel, such as home banking or card executed using a payment reference”, ensuring greater clarity for all stakeholders.
New compliance requirements
The new regulations require PSPs to disclose the beneficiary’s identity before executing a transaction and to provide detailed information in transaction statements.
For direct debits, these details must also be included in account debit authorisations.
The regulations strictly prohibit PSPs from charging fees for providing this information, ensuring that transparency does not come at an additional cost to users.
Although the current framework focuses on card-based transactions and direct debits, the Banco de Portugal has indicated its willingness to revisit unaddressed issues as payment technologies evolve.
The rules, effective from November 19, 2024, also establish penalties for non-compliance.
Violations will be subject to the General Regime for Credit Institutions and Financial Companies, reinforcing the seriousness of these new compliance obligations for the market to adhere to.
“This Notice aims to respond to the needs identified by establishing, for payment service providers, the obligation to make available to payers, in payments using payment references and direct debits, the name or denomination of the final beneficiary of the funds and of the respective payment service provider, thus ensuring the proper functioning and security of payment systems and strengthening the transparency and trust of payers,” the government said.
